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Co-op credit societies get nod to resume gold loan business

Co-op credit societies get nod to resume gold loan business

17 Sep 2020 No comment 39 hits

Panaji: Giving a push for growth of the co-operative credit societies in the state, the government on Thursday lifted the three-year ban on credit societies to advance loans against gold and permitted them to commence the gold loan business once again.

Revoking the ban vide a circular issued on September 17, Registrar of Co-operative Societies Vikas S N Gaunekar said the ban was only an interim arrangement to stop the misuse.

“Gold security is supposed to be most sound collateral for any advance and such ban cannot be continued permanently which may further hamper the growth of credit societies in the state,” he said.

The ban was imposed on July 6, 2017, due to various irregularities noticed in the gold loan business across credit societies.

While allowing the credit societies to sanction loans against gold again, the Registrar has asked them to comply with the model procedures for gold loans. As per the procedure, the maximum loan limit for the amount of gold loan is capped at Rs five lakh with maximum lending up to 80 per cent of the gold value.

Co-operative credit societies have been told to amend their bye-laws for advancing loans against pledged gold and also adopt the prescribed guidelines containing the procedure and other modalities for appointment of gold appraiser, authorised officer, loan limit and maximum allocation of resources to be utilised for advancing against gold. The bye-laws of the society must also prescribe the procedure to be followed in the event of fraud with cohesive action plan for recovery.

For safe custody of the pledged gold, co-operative societies have been asked to create the necessary infrastructure or alternatively use the locker facility of a nearby bank.

The model procedure has been recommended keeping in mind interests of the credit society and the borrowers. It says that the gold articles proposed to be pledged must be valued by a certified appraiser, who holds a valid registration certificate from the Bureau of Indian Standards. The appraiser must also possess permissions from local bodies such as shops and establishments, weights and measures, GST registration number etc.

The gold appraiser’s valuation must be on a stamp paper for legal sanctity purpose. “A photo of gold pledged containing the signatures of the loanee (customer), authorised person and gold appraiser on each photograph with one photo to be placed in the packet in which the gold will be preserved and other in the gold loan file,” says the guidelines.

“The customer must be a member of the co-operative society and the gold loan must be disbursed from the savings account. No person must be sanctioned additional loan if the loan is overdue for interest or principal. In case the loan is not paid within the due date, the loan amount can be recovered by auction after giving 14-day notice. The gold loan must not be permitted to be overdue in principal and interest for a period exceeding 12 months although a grace period of two months is allowed on case to case basis,” say the guidelines.

The post Co-op credit societies get nod to resume gold loan business appeared first on The Navhind Times.

Source: Co-op credit societies get nod to resume gold loan business

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